SHARES in telecoms giant BT, run by Scot Ian Livingston, plunged as much as 7.3% after the company was hit by renewed difficulties at its global services business that deals with large companies although cost-cutting offset the hit to revenues.
BT has been assailed by economic woes at home and abroad that have cut demand for new information technology systems, and faced extra repair costs on its network due to the wet weather of recent months.
Meanwhile, the company said it would create 2000 jobs this year, half of them engineering posts to help with the roll-out of fibre-optic broadband, some of which will be in Scotland.
BT recorded a 6% year-on-year fall in revenues to £4.8 billion in the three months to June 30, some way below market expectations.
But larger than anticipated cost savings of £317 million or 9% in the quarter, saw underlying pre-tax earnings climb 8% year-on-year to £578m.
Mr Livingston said: "Fundamentally, we are pleased about performance.
"Global services [business] is more challenged by the tough market conditions, which means it has to work harder and better. That is the hand we are dealt."
Mr Livingston has overhauled the global services business since it was responsible for a plunge in profits nearly four years ago.
But in the most recent quarter it reported a 6% fall in underlying revenues and a 14% drop in earnings before interest, taxation depreciation and amortisation.
Mr Livingston, who is also a director of Celtic Football Club, put the half the decline down to "tough conditions" in continental Europe and the financial services sector, where fewer firms are upgrading their information technology systems.
"We do not think that is a huge surprise," he said. "The market has not got better, it has got worse recently. People are holding off and deals are more difficult."
But he maintained that the business "has come a long way in recent years".
"What we are not going to rely on is a sustained upturn in European markets," Mr Livingston said. "What we will really focus on is costs."
Revenues were down 3% in BT's retail business, as customers made fewer calls, but Mr Livingston insisted the trend was improving and noted that it withdrew from low margin business hardware sales last year.
The company added a net 85,000 broadband customers out of a market total of 175,000. It also saw a boost to the numbers taking up faster fibre-optic broadband and its BT Vision television offering.
BT's Openreach arm has seen a 40% increase in demand for repairs over the past few weeks, it reported, thanks to the wet weather.
Prioritising repairs over installations, combined with students returning home for the summer holidays, contributed to the number of lines its operates falling by 44,000.
Mr Livingston added: "Probably broadband growth is a bit weaker. It is still remarkably strong given the environment."
The company generated less cash than the City had expected after suffering from £150m in late payments and having to pay a £27m deposit for English football rights.
It has received £100m of the payments since the end of the quarter.
But the company said its expectations for the year as a whole had not changed.
Asked if the company was considering buying the rights to Scottish football, Mr Livingston said: "I am the last person to ask because I am not at all involved in anything about Scottish football because I am on the board of Celtic."
BT's shares fell as much as 15.8p to 201.6p during early trading but later recovered some poise to close at 210.2p, a 7.2p or 3.3% fall on the day.
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